Florida General Contractor Practice Exam

Which financial statement provides a summary of revenues, costs, and expenses over a specific period?

1. Balance Sheet

2. Income Statement

3. Cash Flow Statement

4. Equity Statement

The correct answer is: Income Statement

The income statement provides a summary of revenues, costs, and expenses over a specific period. It is designed to show the company's financial performance during that timeframe, detailing how much money was earned (revenues), how much was spent (costs and expenses), and ultimately presenting the net profit or loss. This statement is a key component of a company's financial reporting, allowing stakeholders to assess the entity's operational effectiveness, profitability, and viability over time. In contrast, the balance sheet offers a snapshot of the company’s financial position at a specific moment, listing assets, liabilities, and equity without focusing on the performance over a period. The cash flow statement tracks the flow of cash in and out of the business, analyzing how well a company generates cash to fund its operations and pay debts. The equity statement typically reflects changes in equity accounts over a period, detailing aspects such as dividends and retained earnings rather than operational results.